Study indicates highly regulated financial sector and unfavorable collateral policy as major barriers in mobilizing private and public climate finance.
The study titled ‘Landscape of Climate Finance in Ethiopia’ prepared with the support of FSD Africa, the Children’s Investment Fund Foundation, and UK Aid has been presented in a knowledge series event hosted by FSD Ethiopia on Thursday March 24, 2023.
As indicated on the report, Ethiopia has a highly regulated financial sector, with limited access to foreign banks and investors and has high collateral requirements and limits to how much companies can borrow. This makes taking loans extremely inaccessible to small-holder farmers and agriculture SMEs, who are vulnerable to the impacts of climate change. As the report further cites, the National Bank of Ethiopia (NBE) has issued a new directive to ease out the requirements, but uptake has been slow.
Even though it has one of the lowest shares of GHG emissions in the world (0.04% in 2019), droughts and desertification are the most destructive natural hazards in Ethiopia, with climate models predicting 1.5-30°C warming by 2050. Projects show that drought-induced impacts on agricultural productivity could reduce Ethiopia’s GDP by up to 10% by 2045.
Also due to high risk low returns, high transaction cost, high interest rates, lack of risk mitigation solution there is a lack of bankable projects in these sectors and appropriate financial products.

According to Ethiopia’s NDC, it requires USD 316 billion (mitigation 87% and adaptation- 13%) by 2030 to implement its NDC. Out of this, 20% will be mobilized domestically and 80% will be needed from international sources. Mitigation Costs: The updated NDC estimates that USD 275.5 billion is required to implement the mitigation targets in Ethiopia from 2020 to 2030. Out of the total USD 275.5 billion, USD 80 billion will be required in CAPEX to finance the CRGE’s four pillars
Ethiopia has established a policy landscape coupling economic growth with climate change action, focusing on low-carbon energy development, conservation of forest reserves, and practicing climate smart agriculture. It created a National Adaptation Plan (NAP-ETH) and developed a resource mobilization strategy to secure resources for adaptation. However, the current landscape of climate finance in Ethiopia is dominated by international public financiers, as private finance from domestic and international investors lags.
The Government has started to transition through the Homegrown Economic Agenda and the New Investment Law, but there is still scope for unlocking private capital through measures such as the development of capital markets, the creation of the Ethiopian Securities Exchange, and the EIH. The NBE should leverage the potential of MFIs and digital financial services to increase energy access, and report recommend government to, enable, and empower prominent public and private financial actors providing favorable collateral and lending policies, project pipelines, and capacity building for MCFs.
“Ethiopia should establish a climate budget tagging system to track domestic public expenditure and international investments, develop a climate-related expenditure tagging and tracking system, and conduct a bottom-up climate finance needs assessment,” the report recommends.
Also according to the report even though the government has a top-down approach to implementing the CRGE Strategy, there is a lack of institutionalization of the CRGE facility at the regional, woreda, and kebele levels, resulting in higher impacts of climate projects.

A delegation composed of members from the Ethiopian Customs Commission (ECC) has paid a visit to Djibouti to solve problems that have popped up in the past week with regards to customs documents.
A couple of weeks back, Capital reported that in relation to a visit led by Alemu Simie, Minister of Transport and Logistics, to Djibouti, one of the major talking topics revolved around customs documents between the duo.
The issue has now been thoroughly looked into by President Ismail Omar Guelleh of Djibouti, who has directed the case to be solved swiftly.
As per the information Capital obtained from reliable sources, a delegation led by Debele Kabeta, Commissioner of ECC, visited Djibouti from Tuesday March 21 through March 23 meeting different stakeholders including leaders of its counterpart.
The problem that impeded the incoming Ethiopian cargo from Djibouti to the center in the past few weeks was related with the request of HS Code and Area Code of Ethiopian cargo from the Djibouti customs.
Sources said that on the visit, the two sides negotiated to ease the case to enable the transport of Ethiopian containerized cargos smoothly to the country.
Sources said that the two sides have been in discussion from March 21 to 23 at the Sheraton Hotel Djibouti, and agreed on various issues including the case raised from the Djiboutian side.
On its social media, the Ethiopian Embassy in Djibouti stated that the two countries customs authorities raised a wide range of concerns on customs related issues and agreed to collaborate to improve customs efficiency.
Sources said that concerns raised from both sides have been solved following the visit of Ethiopian delegation.
Few weeks ago in order to expedite cargo going to Ethiopian consumers, Djiboutian Customs was asking for documents such as the HS Code, TIN and Area Code that the Djiboutian side claimed is part of their responsibility under a protocol signed between the two customs in the second half of the 2000s.
Experts from the Ethiopian side concurred with the argument from the Djibouti side but claimed that demanding such documents is not relevant for the Djiboutian regulatory authority since the documents are used for duty purpose for ECC.
During the latest meeting, the duo also discussed the implementation of a single document management which is planned to be introduced soon.
Recently, Commissioner Debele of the Ethiopian Customs Commission, and Rahma Omar Bogoreh, Director of Transit Department of Djibouti, told Capital that the strong relationship and cooperation between the two countries’ customs offices was one of the exemplary achievements registered on the logistics sector.
The two sides are working to introduce more strong cooperation regarding declaration and other document based works.
Rahma explained that on the new scheme, a declaration given by Ethiopia or vice versa will be used by both countries without further issuance of documents.
“We need to have similar customs procedure based on a single customs administration document,” Debele told Capital recently.

Ethiopia launched the National Food and Nutrition Survey (FNS, 2022) preliminary report on Thursday, March 23. This survey was commissioned by the Ethiopian Ministry of Health and implemented by the Ethiopian Public Health Institute (EPHI), with support from UNICEF and collaborating partners (GAIN and Nutrition International). The FNS, 2022 is funded by The Power of Nutrition, The Eleanor Crook Foundation, The END Fund, Rotary International, and the World Bank.
“The government of Ethiopia is implementing various food and nutrition-related policies and programmes to achieve the national and Sustainable Development Goals (SDG) as well as improve the food and nutrition security of its citizens. The Ministry of Health (MoH), in collaboration with Implementing Ministries and development partners, is also coordinating the implementation of the national Food and Nutrition Strategy,” said Dr. Lia Tadesse, Minister of Health.
Ethiopia has experienced a steady reduction in the prevalence of stunting over the past two decades from 58 per cent in 2000 to 34 per cent in 2022. Early initiation of breastfeeding (initiation of breastfeeding within 1 hour of birth) has shown a slight improvement from 72 per cent (in 2019) to 77 per cent in 2022, and exclusive breastfeeding has increased from 59 per cent in 2019 to 61 per cent in 2022.
This is a result of the Government and partners’ ongoing commitment to end malnutrition in all its forms through creating policy space, expanding service delivery platforms, and capacity-building initiatives.
Despite the progress, Ethiopia is amongst the countries with the highest number of stunted children under five in the world. The average prevalence of stunting in developing countries is 25 per cent. In addition, only 8 per cent of children aged 6 to 23 months consumed the minimum recommended 5 out of 8 food groups. Overall, 47 per cent of children were in severe food poverty, meaning they consumed 2 or fewer food groups a day contributing to an observed high prevalence of wasting at 11 per cent.
“On behalf of the UN, Donors, and our development partners, we would like to commend the leadership and commitment of the Government for driving forward the Food and Nutrition Strategy baseline survey,” said Dr. Aboubacar Kampo, UNICEF Representative in Ethiopia. “Generating evidence and understanding of the nutritional status of children and their families is critical to formulating timely and relevant interventions as well as policy decisions to improve food and nutrition security across the country.”
In recognition of the remaining challenges in nutrition, health, hygiene and sanitation, the Government of Ethiopia launched the National Food and Nutrition Strategy (2022-2030), with a commitment to end malnutrition in all its forms in Ethiopia. This report provides robust data on the nutrition status of women, children, and adolescents and will inform on the implementation of the strategy across sectors.
This report validates the national programmatic priorities and the need to accelerate multisectoral responses and initiatives to improve food and nutrition security in Ethiopia, including large-scale food fortification, micronutrient supplementation programmes, and delivery of essential services for nutrition.
In addition to providing evidence on the state of food and nutrition security in Ethiopia, implementation of the FNS 2022 achieved significant local capacity building for EPHI as a reference laboratory for micronutrient assessments and food samples testing in the region. All micronutrient and food assessments are conducted locally in Ethiopia.

The private sector’s role is vital to fully unlock benefits of the AfCFTA as it offers huge opportunities for the private sector, financial experts emphasize.
On March 20th, the Pan Africa Chamber of Commerce and Industries /PACCI/ hosted a business roundtable on AfCFTA benefits for business. Several representatives from business across Africa and high level officials from regional and international organizations participated on the meeting which aimed to create awareness on the implementation and acceleration of the Africa continental free trade agreement and its benefits.
“SMEs accounts for millions of companies operating in Africa therefore building a structure that supports their growth in to inter-Africa trade is crucial while accelerating the implementation of the AfCFTA,” Kebour Ghenna, Executive Director of the chamber stated whilst indicating that over the 90 percent of PACCI members were SMEs.
As experts indicate, from the African private sector, which constitutes 90 percent of small and medium enterprises, challenges are faced in conducting cross-border trade due to non-tariff barriers such as complex customs procedures, lack of access to finance, high costs of transportation and logistics, and lack of access to information, among others inadequate infrastructure connectivity, rudimentary productive capacity, and risky or expensive payment systems as some of the barriers to trade.

“We must push our governments and policy makers to accelerate the practical impacts of the agreement which has been rather minimal. We need to do more to put in place facilitation and regulation for export and trading,” said the executive director.
At the event, Djamel Ghrib, Director of Economic Development Integration and Trade at the Africa Union stated that, “The AfCFTA is the continents ambitious integration initiative with the aim of creating single continental market that goods and services free to move including free movement of people and business persons to expand investment and inter Africa trade relation across the continent to enhance continental development and transformation,” adding, “Africa is in challenging times due to the COVID-19 pressure, Russia-Ukraine war effect and the climate change. We at the AU commission have ties with the private sector to respond to challenges to get the prosperous Africa.”
“One of the aspects of AfCFTA is to grow continental trade in Africa which seeks technology to grow in the inter Africa trade,” said Stephen Kiptinness, Chief Corporate Affairs Officer at Safaricom telecommunications company, appreciating the recent 3 protocols including the intellectual property protocol that the AU has ratified. He remarked that one of the challenges that Africa has was indeed connectivity.
“Safaricom works to improve connectivity in inter Africa region to provide network which helps digital trade to happen. As we see, bringing Mpesa in many African countries can grow digital trade and financial services and access and inclusion,” said Stephen showing how as a private sector Safaricom is striving to meet the connectivity loopholes.
Africa’s private sector accounts for 80 per cent of total production, two-thirds of investment, and three-quarters of credit, and employs 90 per cent of the working-age population according to recent continental reports.